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Merrill Edge vs. TD Ameritrade: Comparing Brokers for IRAs

Whether you plan to use a Roth or traditional IRA, you'll need a broker. Here's how Merrill Edge and TD Ameritrade stack up.

Individual retirement accounts can be a great way to save for retirement given they offer incredible investment flexibility plus enviable tax benefits. But where you open an IRA will ultimately have a big impact on how you can invest. Here's how two popular brokers, Merrill Edge and TD Ameritrade, compare for investors who want to use a Roth or traditional IRA to start saving for retirement.

Commission prices per trade

How much you pay to place a trade generally varies with what you trade. The table below shows how Merrill Edge and TD Ameritrade compare on commission prices by the type of investment.

Brokerage

Stocks and ETFs

Stock Options

Mutual Funds

Merrill Edge

$6.95 per trade

$6.95 + $0.75 per contract

$19.95 per purchase

TD Ameritrade

$9.99 per trade

$9.99 + $0.75 per contract

$49.99 per purchase

Data sources: Company websites.

Always keep in mind that published prices are often the starting prices, as there are many ways to reduce your average trading cost. Merrill Edge and TD Ameritrade clients can trade thousands of mutual funds and ETFs fee-free, and can benefit from special offers for opening an IRA (cash bonuses, free trades, and additional research are common perks).

Mutual fund selection and commission-free ETFs

Merrill Edge and TD Ameritrade both offer a long list of mutual funds, including thousands of funds that are completely free to buy and sell.

Brokerage

Total Mutual Funds

No-Load, No-Transaction-Fee (NTF) Funds

Commission-Free ETFs

Merrill Edge

More than 7,600

More than 2,300

Not available

TD Ameritrade

More than 11,800

More than 3,800

101 (Vanguard, iShares, PowerShares, and more)

Data sources: Company websites and representatives.

Thanks to no-load, NTF funds and commission-free ETFs, you may find it possible to build a diversified portfolio of funds without paying a single transaction fee to do so. Given that Merrill Edge and TD Ameritrade charge nearly $20 and $50 per mutual fund transaction, respectively, shopping from free funds could save you thousands of dollars in transaction fees over time.

Minimum deposit requirement for IRAs

No need to worry -- neither Merrill Edge nor TD Ameritrade will turn down accounts for failing to meet a certain minimum deposit requirement. That said, depositing more than the minimum at some brokers can give you access to additional perks.

There's just one restriction on your ability to invest globally: Neither broker enables clients to trade on international exchanges. Therefore, investors will have to stick to companies that have tickers listed in the United States, or invest in ETFs and mutual funds with foreign stock exposure. (This isn't a knock on either broker. Only a few online brokers offer access to international stock exchanges.)

Mobile app reviews

Investors don't just want to the ability to trade on the go; they demand it. Virtually all online discount brokers offer apps to trade by phone or tablet. Here's how each broker's users and customers rated its mobile capabilities (as of Jan. 30, 2017).

Brokerage

Apple App Store

Google Play

Merrill Edge

2.0 stars

4.0 stars

TD Ameritrade

5.0 stars

3.5 stars

Data sources: Relevant app stores.

IRA fees: Maintenance and inactivity fees

Fees can add up fast, particularly on smaller accounts. Of these charges, maintenance fees (a fee just for having an IRA account) and inactivity fees (fees for trading too little) are two that you might prefer to avoid if possible. Luckily, neither brokerage is particularly aggressive in the fee department, and neither carries either type of fee.

Research and retirement-planning tools

We tend to think that more information can lead to better investment decisions, and that investors can benefit from research and retirement-planning tools provided by their IRA brokerage.

Merrill Edge clients get access to insights from Morningstar, S&P Capital IQ, and the broker's own Bank of America Merrill Lynch stock analysts. TD Ameritrade also offers research from Morningstar and S&P Capital IQ, plus ratings from Moody's and Credit Suisse.

When it comes to retirement planning, each brokers' tools are too long to list. Both offer a full suite of retirement calculators, guides, and portfolio analysis tools so that you can compare your portfolio against a target portfolio, and score your progress over time.

Depending on how you manage your IRA, you could make the case that either is the best choice for you. Merrill Edge may win over existing Bank of America customers for having integrated accounts, or because of its generally lower commission prices, even if it doesn't offer as many fund choices. TD Ameritrade's service caters strongly to ETF investors, as its commission-free ETF list includes some of the largest names on the market. Outside its freebies, though, TD Ameritrade's prices are generally higher than Merrill Edge. It's all about how each broker's offerings fit within the needs of your IRA. To be clear: The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. Visit Fool.com's IRA Center to compare several brokers all on one page and see if you qualify for any special offers for opening a new account.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Moody's and TD Ameritrade. The Motley Fool has a disclosure policy.

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